Revealed: Tory plot to take the welfare state apart 30 years ago

The Tories hoped to dismantle the welfare state in the 1980s but were scared of the possible reaction to their plans, files reveal.

The scheme is laid bare in files from 1982 released from the national archives under the 30 year rule. Cabinet office staff produced a review of “Longer-Term Options”.

Suggestions included dismantling the NHS, which would be replaced by a system of compulsory private insurance. The extension of private education was proposed, to be funded by an introduction of charges for state schools.

The cabinet concluded that “much could be done to reduce the size of the public sector by privatisation in areas such as healthcare.”

In her memoirs then prime minister Margaret Thatcher claimed, “It was all a total nonsense.” But the records show that the proposals were fully considered at an extended cabinet discussion in September 1982.

What’s more, it was Thatcher and her then chancellor Geoffrey Howe who told the cabinet office to come up with such radical suggestions.

A watered-down version of the paper was leaked to the press. The reaction to that was so bad that Thatcher declared support for the NHS.

But the real version of the document read, “It is therefore worth considering aiming over a period to end the state provision of healthcare for the bulk of the population, so that medical facilities would be privately owned and run, and those seeking healthcare would be required to pay for it.”

As the document noted, “This would of course mean the end of the National Health Service.”

And for education the plans included charges for schooling alongside a “drastic reduction in resources going to the public sector” and full-cost university tuition fees.

David Cameron’s current advisor on crime and policing, Lord Wasserman, worked on the document. His contributions included a plan to cut the number of school teachers by a quarter.

Tory Geoffrey Howe told Thatcher, “We should not be inhibited at this stage by such considerations as…the alleged impossibility of change.”

But the fear of the scale of opposition to the plan meant the grand dismantling of the welfare state didn’t happen. Instead they tried to take it apart a piece at a time.

Thatcher’s war gamble

Margaret Thatcher improved her unpopular government’s fortunes by sending a task force to the Falkland Islands. But the Tories’ resolve was much more uncertain than they let on.

On 19 March 1982, the Argentine military junta seized control of the islands, plunging Britain’s government into crisis. Unemployment was about three million, and inflation was 8 percent.

The Falklands are a relic of empire, 8,000 miles from Britain. Despite the legend of the Iron Lady, Thatcher was prepared to negotiate over their sovereignty while the war was on. The reason was US pressure.

The US government worried that, if defeated, the Argentine military regime could fall and that could increase Russian influence.

The Tories became scared of other possible invasions. The Ministry of Defence sought to reassure Thatcher that Spain wasn’t about to invade Gibraltar.

But she was not impressed, writing, “This?is suspiciously like the Falkland Islands assessment before invasion. 1,000 soldiers with a land boundary, no air cover etc. “Are we READY?”

Panic over family values

In 1982 Thatcher convened a policy group to combat “the problem of dissolving family life”. The group discussed measures that would re-engineer society from a state of “collectivist brutality” to one of “personal responsibility”.

Thatcher praised a paper written by Ferdinand Mount, head of the Number 10 policy unit, in May 1982.

He wrote that loss of discipline over children was no surprise because “being denied the freedom of choice of schools” left parents “more like beggars pleading for alms than customers exerting consumer sovereignty.”

The group proposed the introduction of alternative state-funded schools—a precursor of “free schools”. The Tories believed teachers would support the proposal.

Home office minister Timothy Raison noted, “Although some teachers are leftwing loonies, most are perfectly sensible and responsible and simply want a good lead.”

Education secretary Sir Keith Joseph urged Thatcher to run a campaign of fear to deter teenage girls from “the least good homes” from becoming pregnant. Joseph believed a “sharply rising trend” of bad parenting was a “major cause of poor education and crime”.

He wrote, “The young concerned tend to be the least mature from the least good homes. They embark on parenthood casually.

“Those girls who are at most risk will tend neither to restrain themselves nor insist on or use contraceptives nor to have sufficient grip even to consider abortion in sufficient time.’

His comments echo an earlier speech when he claimed that single mothers “who were first pregnant in adolescence in social classes 4 and 5” were threatening the balance of “our human stock”.

Lose jobs to drive down wages

In 1982 unemployment rose above three million. Yet the Tories were happy with further joblessness to try and drive down wages.

John Sparrow of the Cabinet Office’s Central Policy Review Staff think-tank, wrote in a June memo to Thatcher that the youth training scheme, introduced in 1983, would be “likely to displace some older workers”.

He continued: “Displacement is not necessarily a bad thing, since it puts downward pressure on wage rates.” Sparrow noted that government plans to end out-of-work benefits for 16 year olds would remove them from the unemployment figures.

The Savile connection

The records released under the 30 year rule show that Jimmy Savile wrote to Margaret Thatcher about “my girl patients” at Stoke Mandeville Hospital.

It reads: “Dear Prime Minister. I waited a week before writing to thank you for my lunch invitation because I had such a superb time I didn’t want to be too effusive.

“My girl patients pretended to be madly jealous + wanted to know what you wore + what you ate. All the paralyzed lads called me ‘Sir James’ all week. They all love you. Me too!! Jimmy Savile OBE xxx.”

Other documents reveal Savile was in regular contact with Thatcher. He spent New Year’s Eve with Thatcher for 11 consecutive years.

A series of documents relating to Savile have been redacted for another decade. And transcripts of a phone conversation Thatcher had with Savile have not been released.

Prison ship plan for Irish Republicans

The Tories considered putting Irish Republicans on a prison ship and disposing of their bodies at sea if they died.

The suggestion was made at the height of Republican hunger strikes by former home secretary David Waddington before he joined the Cabinet.

He said, “Any of the terrorists who passed away could be buried at sea, removing the publicity which these people appear to seek.” The measure was rejected on the grounds of cost.

A crisis for Guinness

The Irish Embassy reported a serious problem to Dublin in August 1982. It said a Guinness public relations executive had given “some details on the effects on Guinness of the Falklands crisis and the recent IRA bombings in Britain”.

The memo reads, “During the Falklands crisis an innkeeper in Poole in Dorset had severed his connection with Guinness and had managed to attract publicity for his action.

“He had, however, kept the Guinness tap and when the crisis was over he had resumed the sale of Guinness.”

The company, “was no longer sure that this association with Ireland was helpful. They were encountering a lot of resistance to the Irish angle and this could force them to emphasise facts such as that Guinness was an English company which had its base at Park Royal.”